Developing an appetite
Data-driven online ordering is evolving into something far beyond the simple takeaway, reports Rina Chandran
Singapore’s Ebb & Flow Group took an unusual route to creating one of its most popular food items: analysing more than 200,000 data points to predict customer preference and potential demand.
The result, launched shortly before the coronavirus sent the city state into lockdown, was Wrap Bstrd – wraps with fillings such as chicken satay rice and beef bulgogi, born from the insight that customers preferred Asian flavours in a fuss-free fashion.
“We were able to combine advanced behavioural data capabilities and pattern analyses with the expertise of our chefs to create a brand and menu that was specifically tailored for our customers,” says chief executive Lim Kian Chun. “It is Singapore’s first food and beverage brand that is driven entirely by insights derived
from artificial intelligence,” he says.
Ebb & Flow Group is one of a growing number of companies operating restaurant kitchens known as “dark”, “cloud” or “ghost” kitchens, which have no physical presence, and offer delivery-only services from a centralised location through a mobile app.
Often operating out of warehouses and semi-industrial buildings on the outskirts of cities, dark kitchens allow for burgers and biryanis to be made in the same location, and delivered directly to consumers ordering online. While food delivery was already on the rise in recent years with aggregators such as Zomato, Uber Eats and foodpanda, coronavirus lockdowns and concerns about eating out have precipitated a boom in these services, analysts say.
“The cloud kitchen model was already gaining momentum, now it is at a tipping point for the model to be fully utilised because of the shift to at-home consumption,” says Ali Potia, a partner at consulting firm McKinsey. “We are now starting to see data-driven menu design and pricing for greater personalisation. It is the future.”
We also use analytics to predict demand, as a result we’ve seen little waste in our kitchens
The coronavirus has upended how people live, work and experience leisure, with urban experts predicting that cities will look very different as more people work and shop from home. The cloud kitchen market is seen as one of the biggest beneficiaries of this trend, with Allied Market Research in India estimating that the global industry could be worth about $71bn (£55bn) by 2027 compared to $43bn last year.
Autonomous vehicles and drones that can lower delivery costs will fuel the industry’s growth, the research firm said in a recent report. Swiss bank UBS, in a 2018 report, had forecast that deliveries would make up 10 per cent of the global food services market by 2030, or more than $350bn, helped by dark kitchens, robot chefs, cheaper deliveries and younger people who do not cook.
But with coronavirus, “food delivery has become a necessity rather than a luxury” for even older people, says Phuminant Tantiprasongchai, co-founder of Singapore-based TiffinLabs, which aims to have 1,000 cloud kitchens in cities worldwide. The company has created nine brands so far in Singapore – from pasta to “mind-blowing” fries – with each brand based on analytics of consumers in the delivery zones of its kitchens.
“Data touches every aspect of our business – right from conceptualising restaurants, to testing and creating menus that match consumer preferences, to even identifying the right locations for our kitchens,”
Phuminant says. “We also use analytics to predict demand, as a result we’ve seen little waste in our kitchens,” he adds, as a counter to the argument that cloud kitchens are fuelling an explosion in plastic waste.
Can you pay a lower insurance premium if you order healthy food often, for example? Smart operators will find ways to use the data optimally
With data key to success, ride-hailing and delivery apps such as Uber, Grab and Gojek are partnering with dark kitchen operators. Gojek has tied up with Indian virtual kitchen company Rebel Foods to create 100 cloud kitchens in Indonesia. Uber Eats invites restaurants to launch “delivery-focused concepts” from their current kitchen, based on its data that can identify dishes and cuisines that customers are searching for.
The data – which will need to be “stored safely and managed effectively” – can also be used in other ways, says Potia. “Can you pay a lower insurance premium if you order healthy food often, for example? Smart operators will find ways to use the data optimally,” he says.
The coronavirus has forced the food service industry to adapt: restaurants got onto delivery platforms, and added tables on pavements and in parking lots. Still, the National Restaurant Association of India predicts up to 40 per cent of restaurants in the country may close, with big cities hit the hardest. The Indonesia Hotel and Restaurants Association says up to 30 per cent of restaurants in Jakarta may shut.
Not everyone sees delivery services as a panacea. Restaurants have been complaining about the high fee charged by aggregators, with labour rights groups also opposed to the low wages paid to gig workers who are mostly hired on contract. Some also worry about the social cohesion and sense of community if restaurants are forced out by cloud kitchens.
Places that have something unique to offer will survive, and there is always going to be room for neighbourhood dining
Anurag Katriar, president of the National Restaurant Association of India, an industry group, points to aggregators’ “high commissions, the heavy discounting on the platforms, the opaque nature of the algorithms and their control of the data”.
“But I don’t see deliveries replacing restaurants – eating out is still a special experience, a little celebration with family and friends that cannot be replicated by ordering in,” he says.
But cloud kitchens can also help small brands compete, revitalise abandoned properties and neighbourhoods, and bring about innovations with data, analysts say.
“The market will sort itself out,” says Potia. “Places that have something unique to offer will survive, and there is always going to be room for neighbourhood dining – particularly now, as people go hyper local,” he says.
Indeed, the pandemic has given an unexpected boost to street food, says Chawadee Nualkhair, a food blogger in Bangkok.
“Go to Chinatown at night or the Old Town at lunchtime, and they are absolutely packed,” she says,
referring to neighbourhoods that are typically frequented by tourists but are seeing more locals now. “So while Bangkok’s fine dining scene seems to be holding its breath at the moment, street food seems to be experiencing something of a rebirth.”